Audit report reveals loss of Sh500m in CDF cash

A business centre under construction with the use of CDF funds. Photo/FILE
A business centre under construction with the use of CDF funds. Photo/FILE 

MPs are expected to come under the spotlight this morning with the release of an audit report showing they misused more than a half a billion shillings of taxpayers’ money in their constituencies.

The money was mainly lost in wasteful spending of the Constituency Development Fund (CDF) – a devolved programme that is under the control of MPs and is meant to support infrastructure development at the grassroots.

In a report to be released this morning, the National Taxpayers Association (NTA) censures 34 MPs for their role in the mismanagement of CDF that has led to massive wastage of public funds.

At least Sh500 million of CDF cannot be accounted for, the NTA says, citing poor record keeping and use of ghost projects to steal from the fund.

The report also shows that a huge chunk of CDF money ended up in the pockets of relatives and friends of the MPs who won contracts to build schools, water projects and health centres that stalled midcourse.


NTA arrived at the verdict after it audited the accounts of 34 constituencies and five local authorities.

The CDF, which was created in 2003 to fight poverty at the constituency level through community-based projects and to bridge imbalances in regional development brought about by partisan disbursement of public funds since independence.

Treasury initially released Sh1.26 billion for CDF but the amount has gradually risen to peak at Sh18 billion in the current financial year attracting the attention of civil society groups.

“This audit enables voters in 34 constituencies and five local authorities to know how their funds have been used,” said Mr Michael Otieno, the NTA national coordinator.

The survey unravels the continued misuse of taxpayers’ money despite the financing difficulties facing the government that has had to deal with a number of emergencies in a sluggish economy.

Treasury had to cut spending and redirect some of the money it had earmarked for development expenditure in the first half of the current financial year as prolonged drought left nearly 10 million people starving and to stimulate the economy through emergency programmes such as kazi kwa vijana.

Revelations of misuse of public funds come at a time when the government has put in place austerity measures such the withdrawal of fuel guzzlers from its fleets to reduce expenditure and redirect money to essential areas.

NTA questions the manner in which devolved funds are managed, faulting the central government for failing to put in place the necessary structures to prevent pilferage.

It found that in some constituencies, CDF money has been used to finance non-existent projects, while in other cases construction work was started and abandoned half way after money was squandered.

The report is likely to cause ripples among MPs and within the management of devolved fund as it paints a gloomy picture of the expenditures and prioritisation of projects at the grassroots level.

A similar report in 2007 is believed to have partly led to the voting out of 160 MPs after it discovered massive wastage in constituencies where politicians had appointed their relatives and friends to manage CDF.

Mr Otieno, told the Business Daily that the findings represent the second round of an ongoing audit that will cover all constituencies by December 2011.

The survey involves actual visits to all CDF funded projects, interviews with citizens and technical assessment by engineers to determine use of devolved funds based on the 2007-2008 allocations.

The NTA is a national, volunteer-based organisation established to improve the delivery of services and the management of devolved funds for the benefit of all Kenyans.

It was established in April 2006 by a coalition of leaders from the civil society, and private and public sectors.

The association has been compiling and disseminating Citizens’ Report Cards on the provision of services and the management of devolved funds in constituencies and local authorities.

The CDF is popular with MPs as a development and political vehicle but it has come under scrutiny in the way it has been managed.

Some constituencies have been accused of allocating funds to unnecessary projects leading to massive wastage while in others MPs have been accused of appointing their supporters and relatives, most of who are not qualified to manage the funds.

The CDF injects about Sh50 million to each of the country’s 210 constituencies every year.

The involvement of MPs has however come under increasing scrutiny with regard to the appointment of management committees and choice of projects.

CDF was established in 2003 through an Act of parliament.

The fund aims to control imbalances in regional development brought about by partisan politics.

It targets all constituency-level development projects, particularly those aiming to combat poverty at the grassroots.

It comprises an annual budgetary allocation equivalent to 2.5 per cent of the government’s ordinary revenue and is managed through four committees.